Draw income statement

Here is the Income Statement for Island Traders for the year ended 28 February 2019.

Step 1: Calculate Adjustments

• Depreciation on Equipment:

  $$\text{Carrying Amount} = \text{Cost} - \text{Accumulated Depreciation}$$ $$\text{Carrying Amount} = R95\,600 - R20\,600 = R75\,000$$ $$\text{Depreciation Expense} = \text{Carrying Amount} \times \text{Rate}$$ $$\text{Depreciation Expense} = R75\,000 \times 20\% = R15\,000$$

• Interest on Fixed Deposit:

  $$\text{Interest Income} = \text{Fixed Deposit Amount} \times \text{Rate}$$ $$\text{Interest Income} = R50\,000 \times 10\% = R5\,000$$

  (This is accrued interest as none was recorded in the trial balance.)

• Rent Income: The trial balance shows R36,000. At R3,000 per month, this covers $R36\,000 / R3\,000 = 12$ months. No adjustment is needed for rent income.

• Insurance Expense: The trial balance shows R10,000. At R1,000 per month, the expense for 12 months